Corporate Tax Fraud: A Serious Crime

Almost every country has fixed government rules and policies that need to be adhered to, as well as certain responsibilities defined for every citizen of the country.

When an individual earns money in some manner that is more than what is required to support their basic needs, such as supporting the family, they are entitled to pay an amount that is a part of their earnings as taxes to the government. This amount is decided by the government and is based on the earning capacity of the individual, net income for the year, and other such factors. The same applies to organisations that employ people to conduct their business, where a percentage of business profits are to be paid as tax to the government.

The entire process is cyclic in nature and aids the lessening of monetary disparities that are present in the society. The revenue that is obtained from the people in turn goes to them indirectly in the form of infrastructure, welfare, facilities and other civic needs. But the problem lies in bigger countries, such as the UK for example, where it becomes very difficult to calculate and know the income of every citizen or company individually, making it easier for some irrational and selfish people to devise ideas that will help them evade paying taxes. So, tax evasion is looked at as a bigger concern by the government, and laws are being introduced to curb same.

This crime, as every other, is illegal and individuals found evading taxes are liable to serious punishments in the form of imprisonment, heavy fines or seizure of the entire wealth hoarded. This crime is indulged in at various levels, ranging from an individual who is salaried to a multinational company making huge profits. Very cheap methods are followed to dodge the responsibility assigned to them. These individuals do not disclose details about their income to the HM Revenue & Customs, which should be done periodically, thereby paying a less amount as tax than the amount they actually need to pay. Other methods employed in corporate tax fraud are those where companies do not follow a PAYE system for salaries, failing to reveal the actual profits by understating them, charging the customers taxes such as 'value added tax', 'service tax' and service charge, but not registering the same with the government.

Crafty methods, for example paying the employees in 'cash' without deduction of taxes or NIC, are also followed by companies, which harms both the individual and the country's economy. Some companies don't register with HMRC and work as private organisations without tax liabilities. These actions are damaging to the country and the citizens indirectly. One major repercussion is an imbalance in the monetary flow. The rich tend to get richer and the poor tend to get poorer. But the government and its functioning should continue, and hence it leans on agencies like the World Bank for funds and becomes indebted to it.

Welfare schemes are thwarted and the government becomes unable to improve the stature of the society due to lack of money. If all the citizens pay their taxes regularly, a surplus economy is predicted, which benefits society and the country as a whole.
Help lines and tax evasion hotlines are now spread throughout the UK, which not only help to create awareness among people but also act as a podium to resolve and inform the government about criminals who evade taxes. People need to have a basic understanding that by paying taxes, they are making the country a rich and a better place to live in for generations to come.